Russell Reconstitution

Why this matters for biotechs.

The S&P-500 includes the 500 largest publicly listed US companies. The Russell 3000 includes the 3,000 largest publicly listed US companies. This means many smaller (and growing) biotechs get swept into the Russell 3000 during reconstitution every May & June.

As biotech awareness (along with their market cap) grows, the chances of it being added to an “index” increases. When this occurs, it can result in significant share price appreciation.

Let’s take the example of Citius Pharma (CTXR).

Blackrock (who manages the various Russell Indexes) bought nearly 2M shares of Citius Pharma last quarter. The company is now on Blackrock’s “radar”.

The various Russell Indexes undergo a ‘reconstitution” review every May and that process started yesterday. It culminates on June 25 when the indexes officially reconstitute.

The preliminary list of new additions will be released on June 4. Remember that Blackrock manages these funds and they are now keenly aware of Citius.

There is a high probability Citius will be added to the Russell Micro-Cap ETF and we will learn that news on June 4.

Link to the ETF

When that happens, Blackrock and OTHER indexes that MIRROR this ETF, MUST BUY SHARES OF CITIUS!

As the days get closer to the reconstitution day of June 24, expect the PPS to increase in preparation of the big day.

Remember, they must buy and HOLD these shares until June 2022.

Watch this video to learn why & how the Russell Reconstitution can increase CTXR share price.

The 2021 Russell Reconstitution calendar is as follows:

  • Friday, May 7 – “rank day” – index membership eligibility for 2021 Russell Reconstitution determined from constituent market capitalization at market close.
  •  Friday, June 4 – preliminary index add & delete lists posted to the FTSE Russell website after 6PM US eastern time.
  • June 11 & 18 – preliminary index add & delete lists (reflecting any updates) posted to the FTSE Russell website after 6PM US eastern time.
  • Monday, June 14 – “lock down” period begins – index adds & delete lists considered final 
  • Friday, June 25 – Russell Reconstitution is final after the close of the US equity markets.
  • Monday, June 28 – equity markets open with the newly reconstituted Russell US Indexes.

Here is a good resource if you want to learn more: